Brazil polymers, chem import tax hike begins

: Petrochemicals
24/10/15

Brazil's import tax increase on a number of polymers and chemicals to 20pc from 12.6pc, including polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC), has gone into effect.

The new import tax rate was effective on 15 October and is valid for 12 months, according to Gecex, the Brazilian committee for commercial trade management.

A PVC plastic converter with operations across Latin America told Argus that although the tax increase only started today, Brazilian polymers producers already raised prices by 5-6pc since the end of September. PVC import prices into Brazil, with the exception of those originating from the US, also followed suit last week, the source said.

Higher prices are expected in Brazil despite stable PVC demand. Furthermore, maritime logistics difficulties at ports in southern Brazilcontinue and there is concern they will worsen as the end of the year approaches, putting more pressure on plastic resins prices. The major port of Navegantes is currently undergoing an expansion project that has created delays at that port and surrounding ports.

US traders said that the increase in Brazilian import taxes is likely to lead to at least a short-term decline in US exports to Brazil.

"I think short term, over one to two months, [the higher taxes] will deter imports," said one US trader. "[Brazilian polymers producer] Braskem will take advantage and increase the price… and then customers will buy anyway at the new price level."

During that short period, there will be increased availability of US product for other regions, according to another US trader.

"Big volumes will need to go elsewhere," said the trader. "Maybe elsewhere in South America, maybe other regions."

Domestic manufacturers and chemical industry associations welcomed the decision when it was first announced on 18 September. Brazil's chemical industry association Abiquim has been asking the government to provide commercial protections for 62 products since May.

But critics of the tax hikes say they will increase costs for consumers and manufacturers who rely on imported polymers and chemicals.

Brazil's plastic industry association Abiplast said in September it was concerned that the higher import taxes will increase production costs for plastic products, which could result in higher prices for end consumers.

The Brazilian chemical industry is responsible for around 11pc of Brazil's GDP, according to Abiquim.

By Fred Fernandes and Michelle Klump

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24/12/18

Viewpoint: rHDPE packaging grade demand solid into 2025

London, 18 December (Argus) — A number of European recyclers report stronger demand for premium rHDPE BM grades heading into 2025, but prices and margins are likely to remain under pressure. European recyclers have endured well-publicised struggles in the past two years, but demand for rHDPE BM natural and, particularly, white grades has been the brightest spot for those operating in the polyolefin market in 2024. Prices have risen by 7-8pc over the year and — while some recyclers are keen to emphasise that contracting out their 2025 volumes has not been without its difficulties — many report that they have more orders for the coming year than they are able to supply. The closure of UK-based recycler Viridor's Avonmouth recycling plant , an rHDPE natural supplier, pushed some orders to other suppliers at the end of the year. But underlying demand also appears to be rising, and large packaging companies told Argus that they expect — based on forecasts from their customers, and with the caveat that these do not always translate into physical volumes — to be using more rHDPE in 2025 than in 2024. This shows brands are keen to further increase the recycled content of their packaging, and that many see rHDPE as a good category to focus on. But challenges remain, even for recyclers that are seeing a stronger demand outlook. Packaging manufacturers and brand owners have no legal obligation to use rHDPE in 2025, and there will be a limit to what they will pay for sustainable packaging materials. Fast-moving consumer goods (FMCG) brands' sales were hit by inflation in 2022 and 2023, and they remain cognisant of the need to find the right price point with their customers as volumes recover. As a result, decreases in the virgin HDPE market and the consequent widening of the rHDPE BM-virgin HDPE BM premium to its highest since August 2023 may become an obstacle to demand. Barring a sharp rise in crude and naphtha costs that underpin the European petrochemicals chain, Argus does not expects any major increases in HDPE prices in 2025. The potential for virgin prices to cap recyclate prices will remain for the foreseeable future. Some European recyclers are also concerned about import pressure, which is resurfacing after a lull linked to two periods of unusually-higher Asia-Europe freight rates in 2024. Asian rHDPE natural pellets have been offered up to €400-500/t ($419-$524/t) cheaper than the highest-priced European supply in recent weeks. And, although some buyers prefer the optics of supporting their regional recycling industry, or the opportunity to resolve quality issues more easily and avoid traceability concerns by working with local suppliers, this price advantage may encourage more to find import sources they are comfortable with. Recyclers also still need to find an outlet for their lower-value grades, from darker/coloured packaging grades down to grades that mainly sell into "cost-saving" markets such as pipe. A typical colour-sorting recycling process produces a range of grades, reflecting the combined natural, white and mixed-colour composition of standard HDPE packaging bales in northwest Europe. But finding a home for darker pellets can be difficult in the packaging industry, where buyers like to process white or natural grades with masterbatch colourants — concentrated pigments — to preserve the appearance of their products. And construction and industrial markets are depressed by the current economic environment and unlikely to buy large volumes unless recyclers can offer a discount to virgin material. Recyclers making premium HDPE grades may therefore feel more confident than those in other polyolefin markets heading into 2025. But until buyers are more accepting of a wide range of grades, or recently-confirmed legislation mandating the use of recyclates in polyolefin packaging kicks in, they will be under no illusion that the past few years' challenges can be consigned to the rear view mirror just yet. By Will Collins Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: EU PVC margins to hold below average in 2025

24/12/18

Viewpoint: EU PVC margins to hold below average in 2025

London, 18 December (Argus) — European polyvinyl chloride (PVC) margins are likely to remain subdued in 2025, with a repeat of the sluggish demand and rising ethylene costs seen in 2024. Weakening European PVC consumption throughout 2024 was mainly underpinned by lower construction activity, a key demand driver. Construction purchasing managers index (PMI) data, compiled by S&P Global and Hamburg Commercial Bank (HCOB), show the eurozone construction PMI for 2024 peaked in October at 43.0, still way below the 50 mark that separates contraction and expansion. PVC market participants are cautiously optimistic that recent declines in interest rates from the European Central Bank (ECB) may help stimulate demand for home-builds in 2025, and improved PVC demand will follow. The ECB reduced rates three times in 2024, to 3.25pc. Rates may continue to ease in the short term, but as witnessed in 2024 this would take time to filter through to European PVC demand. Because of this, buyers are contemplating either maintaining or reducing contractual PVC volume commitments for 2025, noting struggles with passing raw material costs to customers. Anti-dumping duties (ADDs) on s-PVC imports from the US and Egypt helped to reduce excess supply in 2024, and while this is likely to continue into 2025 there is limited interest from buyers to source additional supply because of lower demand. Asian s-PVC imports remained minimal, with volatility in freight costs and longer lead times likely to suppress buying interest into 2025. Re-balancing act Domestic PVC producers focused on reducing inventories and operating rates for much of 2024 to keep the market balanced, with average operating rates between 60-70pc for s-PVC production and at the higher end of the range for specialty grades. But re-balancing proved to be a slow process in light of weakening demand, forcing European producers to keep operating rates and margins low for much of the year. Argus calculated s-PVC net production margins, based on feedstock ethylene costs in northwest Europe, averaged around €287.04/t between January-November 2024, lower by €109.04/t than during the same period in 2023 and around €73.40/t lower than the Argus 2015-23 average. Easing electricity costs in 2024 helped to suppress further PVC margin loss, but demand weakness throughout the year remained in favour of buyers as contract prices settled predominantly below the implied ethylene cost. With European ethylene prices likely to increase and PVC demand expectations suppressed throughout 2025, there could be another year of below-average margins for PVC producers. Argus assessed the December suspension PVC (s-PVC) preliminary contract marker for northwest Europe at €1,120/t on 20 December, reflective of a preliminary contract delta for December at minus €5/t. This is comparable to an ethylene monthly contract price (MCP) movement of minus €7.50/t for December. This raises the possibility of further supply consolidation in Europe to re-balance the market in the medium term, with smaller producers announcing potential closure of PVC production units in central and eastern Europe in 2025. Others plan to mothball some specialty PVC production lines, while others are seeking import licenses to supply PVC into emerging markets such as India. This is difficult to achieve because of cost-competitiveness. A rise in regional construction activity, and therefore PVC demand, will remain the quickest way to re-balance the market, helping to raise operating rates and margins back to above-average levels as buyers commit to more contractual volumes. By George Barsted and Michael Vitiello Integrated s-PVC NWE net margins €/t Eurozone construction PMI Index Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Japan eyes methanol as marine bridging fuel

24/12/18

Viewpoint: Japan eyes methanol as marine bridging fuel

Tokyo, 18 December (Argus) — Japanese demand for methanol as an alternative marine fuel is expected to increase, especially after 2027, but it is likely it will mainly be used as a transition fuel before the commercial launch of ammonia- and hydrogen-fuelled vessels. The Japanese shipping industry is expected to launch more methanol-fuelled vessels from 2027 ( see table ), to help reduce greenhouse gas (GHG) emissions from the global maritime sector. Global regulatory body the International Maritime Organization (IMO) in 2023 pledged to achieve net zero emissions in international waters by or around 2050. To help achieve the IMO's target, a total of 26 methanol-powered vessels are expected to be commissioned worldwide by the end of this year, followed by 54 ships in 2025 and 96 carriers in 2026, according to a report released in November by Japanese classification society ClassNK. This would increase global methanol demand to 4.5mn t/yr by 2026, said the report. As of June, there are 33 methanol-fuelled vessels currently in use. Methanol-fuelled vessels can refuel at around 130 major ports all over the world, except in Japan, according to Japanese shipowner Mitsui OSK Lines (Mol). The city of Yokohama in the eastern prefecture of Kanagawa, in co-operation with Mitsubishi Gas Chemical (MGC) and Maersk, launched a study on methanol and green methanol bunkering in the port of Yokohama in December 2023. Since then, the group, in collaboration with new partners — Japanese refiner Idemitsu, MGC's shipping subsidiary Kokuka Sangyo, domestic shipping firm Uyeno Transtech and Yokohama Kawasaki international port — has conducted a ship-to-ship bunkering simulation at the port of Yokohama in September. Expectations of the increase in methanol use, especially cleaner e-methanol, have led Japanese firms to become more involved in upstream projects to secure the fuel. Japanese firms have invested in more than 10 e-methanol production projects both in and outside of Japan ( see table ), with the number of projects likely to increase, according to the ministry of economy, trade and industry. Japanese firms are developing new carriers, but at the same time are also trying to modify existing vessels — which currently use fuel oil, LNG, LPG and methanol — to be able to burn renewable fuels such as biofuels, e-methane and e-methanol. It would be easy to increase the number of methanol-fuelled ships, given their relatively low initial or modification costs compared with LNG-fed vessels, according to Mol. Methanol is also a stable liquid at room temperature and atmosphere pressure, making it easy to transport and store compared to other alternative fuels, Mol added. Fellow shipping company Nippon Yusen Kaisha (NYK line) is also mulling the development of smaller methanol-fuelled handymax ships that are unable to be equipped with large ammonia fuel tanks, to aid with decarbonisation. Methanol a temporary solution But Japanese firms see methanol mostly as a "bridging fuel" rather than a zero-emission fuel, as methanol can reduce GHG emissions only by 15pc compared to traditional bunker fuel, although it can curb sulphur oxide and nitrogen oxide emissions by up to 99pc and 80pc, respectively. It would be vital to begin introducing much cleaner marine fuels, such as ammonia and hydrogen, to meet the maritime sector's net-zero goal. Tokyo is trying to promote the development of ammonia and hydrogen-fuelled ships by providing financial support, while the utilisation of such clean vessels could materialise from around 2030, the ministry of land, infrastructure, transport and tourism (Mlit) said. Japan's state-owned research institute Nedo plans to provide ¥35bn ($229mn) to support the development of engines, fuel tanks, fuel supply systems and other core technologies for zero-emission ships that use hydrogen and ammonia, as well as LNG and e-methane, under its ¥2.76 trillion green innovation fund. But the grants are much larger than those for the development of methanol-fuelled ships, which are currently available only from Mlit and the environment ministry, with the amount of ¥100mn per vessel over two to three years. The scheme has been open for application every year since 2023. But the ministries' scheme also targets LNG-fuelled ships, with a breakdown of allotment for methanol-powered vessels unclear. By Reina Maeda and Nanami Oki Japanese firms' methanol projects Methanol-fuelled ships Company # of vessel Type Target commercialisation Announcement Mitsubishi Gas Chemical, Mitsui OSK Line 1 Ocean-going methanol carrier Jul-05 May-23 Toyofuji Shipping, Mitsubishi Heavy Industries 2 Ro-Ro vessel 2027-28 fiscal year Jun-24 Mitsui OSK Line 1 Coastal methanol carrier Dec-24 Jul-24 NS United Kaiun, Nihon Shipyard, Jaman Marine United, Imabari Shipbuilding Multiple Bulk carrier After 2027-28 fiscal year May-24 Orix, Tsuneishi Shipbuilding 2 Bulk carrier Jul-24 Production Company Product Country Target commercialisation Target capacity (t/yr) Mitsui E-methanol US Jan-24 1630000 Mitsubishi Gas Chemical Bio-methanol Japan Jun-24 Small amount Mitsubishi Gas Chemical, Kobelco E-methanol Japan NA NA Cosmo, Toyo Engineering E-methanol Japan NA NA Sumitomo Chemical E-methanol Japan 2030s NA Mitsui, Asahi Kasei Bio-methanol US Jun-23 NA Toyo Engineering E-methanol India 2030 NA Investment Company Product Country Target commercialisation Target capacity (t/yr) Mitsui E-methanol Denmark NA 42,000 Idemitsu E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 JOGMEC E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 Mitsu OSK Line E-methanol Brazil, US, Chile, Uruguay, Australia 2,030 4,000,000 Table source: Firm's company releases Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

E-PVC buyers build stocks ahead of US tariffs

24/12/13

E-PVC buyers build stocks ahead of US tariffs

Houston, 13 December (Argus) — Emulsion-grade polyvinyl chloride (E-PVC) producers and buyers are racing to build inventories ahead of potential US tariffs on imported goods, according to market participants at the Vinyl Week conference this week in Louisville, Kentucky. President-elect Donald Trump has said he would impose 25pc tariffs on all goods imported from Canada and Mexico after he takes office next month, and that he would raise tariffs on Chinese imports by 10pc. Tariffs on Mexican imports are of particular concern to buyers who rely on the country for some imported E-PVC, also known as specialty or paste PVC. Some US buyers at the conference sponsored by the Plastics Industry Association said a more expansive tariff policy would not only raise delivered prices for E-PVC, it also would also be inflationary for everyday goods. Higher prices could reduce consumer spending power and cut demand for E-PVC in flooring or automotive manufacturing. Other buyers of E-PVC said a more focused scope for tariffs that centered on supporting industry in the US could be beneficial. One flooring producer said tariffs could allow it to recapture market share for products like luxury vinyl tile that have been increasingly dominated by imports from countries like China. Flooring is one of the two largest end use consumers for E-PVC. Suppliers are taking precautions, even if the tariff policy proves to be limited. European producers with extensive warehouse networks in the US have been exporting even greater volumes to North America ahead of potential tariffs that Trump threatened during his campaign, as well before a potential resumption of dockworker strikes in mid-January. US distributors are building inventories of Mexican imports in order to beat the threatened tariffs. US dependence on E-PVC imports deepened after Orbia closed its 60,000 t/yr Pedricktown, New Jersey plant in the fourth quarter with plans to supply US cusomers from its plant in Marl, Germany. The closure leaves the US E-PVC manufacturing capacity at around 156,000 t/yr. While the E-PVC market is more niche compared to the suspension-grade market used in pipe production, the US is structurally short on supply for specialty resins. Many E-PVC buyers with operations on both sides of the Atlantic expect US demand growth to be stronger than in Europe. Some European producers have been raising operating rates above 70pc because exporting excess volume to the US was a viable option. Tariffs could challenge that strategy as higher import prices for US buyers would pressure export prices, and European producers are not inclined to cut prices, market participants said. If Trump does not implement his promised tariffs, E-PVC buyers and producers alike generally agreed that US market demand would be stable to up slightly in 2025. By Aaron May Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US PET recycling rate rose in 2023

24/12/13

US PET recycling rate rose in 2023

Houston, 13 December (Argus) — The 2023 US recycling rate for PET bottles rose to 33pc, its highest level since 1996, according to data from the National Association for PET Container Resources (NAPCOR). The US collected 1.96bn lbs of PET bottles for recycling in 2023, up by 2.7pc from 1.91bn in 2022, even while fewer bottles were produced, according to NAPCOR. Overall PET bottle production was 5.95bn lbs in 2023, a 9.8pc drop from 2022. The rPET content rate in US bottles reached a high of 16.2pc in 2023, up from 13.2pc in 2022. Total US rPET content in bottles reached 966mn lbs in 2023, up from 870mn lbs in 2022. NAPCOR said the increase in collection demonstrates increased demand for rPET across the US. Overall North American PET bottle recycling rates also increased in 2023, reaching a high of 41.3pc. Despite the increase in recycled production in 2023, it was a tough year for recyclers due to a drop in consumer spending, which tightened the amount that bottlers and brands were willing to spend on recycled material. By Zach Kluver Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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